A Closer Look at Direct Energy
Many consumers don’t realize that Alberta’s electricity industry is rife with cases of job outsourcing by some of the largest players in the game.
The business case for outsourcing jobs overseas is simple. Lowering operating costs helps companies increase profits, and supposedly remain competitive against others in the market. Sadly, as our core industries outsource more and more, the intellectual knowledge, software code, and experts in the market are being lost and gravitating to countries overseas. If Alberta wants to be a player in the Information Technology market, we should put a stop to exporting our knowledge and focus on encouraging some of our existing utilities to bring jobs back to Alberta.
It can be argued that the goal of most companies is to make a profit, so the outsourcing of jobs such as customer care or information technology seems inevitable. It’s just the way it is. Telus, ENMAX, Direct Energy, and ATCO are doing it, so why not others?
But is it right?
Today, it’s not only jobs that are being lost. Earlier this year there was a major sale of an essential Alberta asset, most notably the natural gas holdings that traditionally have backed the regulated rate supply of gas to consumers in Alberta. It was sold off by Direct Energy’s corporate holding company, Centrica, to a consortium of companies in China.
Every job exported out of the province means less money being circulated in our local economy. Once the jobs are gone, they won’t be easy to get back. If we are also selling off our natural resources, when all of this is said and done, what will be left for Alberta?
A Closer Look at Direct Energy as an RRO Utility Provider in Alberta
Is your energy provider guilty of outsourcing? If you currently get either your electricity or natural gas from Direct Energy, then the answer is yes.
When Direct Energy purchased the customer base from ATCO, they ended up owning the franchised territory of all the customers on the Regulated Rate Option (RRO) serviced within ATCO’s distribution zone. As a regulated rate provider, Direct Energy is guaranteed a profit under the government’s rate setting plan. As well, Direct Energy is being subsidized to the tune of millions of dollars - paid out of the carbon tax - in order to keep their electricity rate capped at 6.8 cents/kWh.
Is it right to subsidize a company that is shipping the majority of their jobs out of the province?
Here is a closer look at Direct Energy’s business and where its customers’ money is ACTUALLY going.
Pick up the phone and call Direct Energy at 1 (866) 420-3174. During the opening greeting you will be told that information will be processed outside Canada. Dig a little deeper and you will find that your phone call will be directed to either a call center in Guatemala or in the Philippines. The individuals don’t work for Direct Energy and are instructed not to tell you who their employer is. But, with the help from our friends at Google, the answer was just a click away.
Direct Energy bought the retail customer list off of ATCO a decade ago for about $200 million. Quietly, both ATCO and Direct Energy progressively moved jobs out of the country in order to squeeze a little more profit out of the business. This transition meant hundreds of Alberta jobs were lost.
Where Were the Jobs & Profits Outsourced to?
The Internet Technologies firm HCL Technologies bagged a contract from Direct Energy (Centrica) to implement and manage residential billing and customer care operations in the Alberta market. Who is HCL? You will find them trading on the Bombay Stock Exchange and their corporate headquarters are located in Noida, India.
For those that don’t know, Direct Energy is a division of Centrica PLC which is principally focused on the supply of electricity and gas to businesses and consumers in the United Kingdom and North America, with back-office functions located in India and South Africa. Don’t get us wrong this is an amazing company. The Calgary office is a state-of-the-art world class energy trading house which employs a number of young traders and three customer problem resolution representatives that are dedicated to dealing with customer billing errors. They also have a small number of employees in their Edmonton office, two of which are also focused on dealing with customer billing errors and the rest of which are regulatory and marketing staff.
According to the customer service representative we spoke to in the Philippines, the actual customer invoices are processed out of the Texas office and they use a post office box in Calgary to mail them out. When we called back to ask a follow-up question, the telephone routing sent us to a different representative in a call center in Guatemala. During this call we found that the official billing address for Direct Energy is P.O Box 1520 Station M, Calgary. That’s right, it is a post office box.
In their latest move, earlier this year Direct Energy sold off all of their Alberta gas holdings to a consortium from China. As Alberta’s major regulated rate gas supplier in the province; maybe the question that should be asked is, should the largest government regulated natural gas utility been allowed to sell off all their gas holdings? The new owners: a joint partnership including Mercuria (HQ Geneva), Can-China Global Resource Fund (in part, funded by China Exim Bank), MIE Holdings Corporation (HQ Hong Kong) acquired Direct Energy’s foothold in the province for $722 million.
If you dig a little deeper and look at their stock prices – it may help explain what is behind the divestitures. Did the slump in share value precipitate the cutting costs and selling off of assets? Sadly, Alberta was put on the chopping block.
So back to the question we asked earlier. Why support a company with Alberta tax dollars if their jobs and profits are being shipped out of the province?
Obviously, a lot of companies use outsourcing services to cut costs, so why pick on Direct Energy? Actually, we aren’t and in our next few blogs we will explore ATCO, who sold off their information technology business for $200 million, and who, under a 10-year outsourcing program, WIPRO will net over $1.2 Billion of jobs lost to Alberta. Also, let’s not forget ENMAX who relies on the TATA Group for programming services. HCL, Wipro and Tata are all rooted in India.
The truth is that between the new Chinese Consortium that bought Direct Energy’s gas business, HCL, Centrica, TATA, and WIPRO combined they now have a very large block of controlled influence over one of the most important aspects of the Alberta energy industry; “the Alberta Consumer”.
Current Practices will Impact Future Workers
If we continue to close down our technology operations, we will lose the digital technologies brain trust that is needed to compete in the future on the global stage. It is already happening as Direct Energy is simply now using a black box for billing, and their customer care staff read from prepared scripts. If we lose this foothold in the future of technology solutions, we will risk becoming a have not province. If we ship call center jobs to people in South America, Asia, or the USA we will lose good paying local jobs that Albertans can perform. If we move confidential customer data out of the country, we will lose control over the privacy and confidentiality of consumer data. As the phone message from Direct Energy Regulated Services will tell you – your data is being stored outside of Canada.
The reality is that future good paying jobs are now lost. Our children and our children’s children will be looking for jobs one day and they will be gone. They are not coming back, unless we say enough is enough and support Alberta made businesses.
Choosing a Local Company
Consumers have a choice – accept what is happening; ask your MLA to address this issue in the legislature; or, simply switch over to a retailer who is local, has rates under the 6.8 cent artificial cap, doesn’t need to be subsidized by the carbon tax, and reinvests his profits in Alberta rather than shipping the profits out of the country.
Compare a local Alberta company like NewGen Energy with Direct Energy as a regulated rate provider and you will notice some significant differences: low competitive rates, special rates for seniors, local customer care, budget billing programs, pick-a-date options, credit card payment options, green energy programs, no cancellation penalties, and a long list of community initiatives.
The list goes on. As we continue to grow, it is local companies like NewGen Energy that will be around to hire the workers of the future.